While typically offering current accounts, loans, insurance and any number of other financial products for the public, the last two decades have seen banks aggressively target the highly lucrative wealth management sector ahead of their traditional roles.
Following the global financial crisis of 2009, this new structure and governance of the banking industry has remained one of the most hotly contested issues in British politics.
The credit crunch led to many banks posting record annual losses and requiring government loans in order to avoid bankruptcy, but most have now returned to profitability – though critics argue that this taxpayer-funded change of fortunes has not been repaid by a previously promised increase in availability in loans for small business owners to fuel further economic growth.
Although there has been a growth in online-only banks recently – First Direct and Smile being two pioneers of this system – the traditional forces in the industry still remain dominant. Currently, the largest players in UK banking are Royal Bank of Scotland, Lloyds, Barclays, Santander and HSBC – with each responsible for a number of subsidiary companies (such as ‘RBS Group’ owned Natwest, and ‘Lloyds Banking Group’ owned Halifax).
One area of decline for the financial sector in recent times has been that of the building society. Halifax were previously market-leaders, but their profitability saw the business move into fully-fledged banking around the turn of the millennium. Responsible for around two thirds of the industry, Nationwide are currently the UK’s largest building society – and are considered to be larger than their 44 competitors combined.